What are the real perks of buying RE internationally?

[Joe S.]

So my question is what is the real upside if there is an upside to buying property out of the country?

I’ve seen a couple of posters that advertise directly or indirectly about different projects internationally.
I’m at a point in my life that I’m trying to buy primarily in one state now and that more local to where Live at if possible.  A couple years ago, I bought in another state as well, but that state I was familiar with because I used to live there, and the state has lower property taxes.

Are the deals really that much better out of the country or is it simply something that sounds romantic and offers bragging rights?

[Henry Clark]

To OP questions.  Financial, romantic or bragging rights?  

1.  Financial-  You’re in Texas.  98% of all investors will do far better in Texas than overseas.  That’s the financial view to me.  

Not coming across in this post very well, but you still have to pay US taxes on overseas profits.  Belize has zero capital gains tax.  We would still have to pay the full US tax if we sold.  Belize has almost zero personal income taxes.  We would still need to pay US taxes for income made in Belize.

2.  Romantic-  most people in the US are UScentric.  Which we should be.  The poorest person sleeping under a bridge in the US is far wealthier than 25% of the world.  Most of my family is military, my mother is Korean.  Growing up we were always going to go conquer the world.  Staying home was not part of the equation.  So not so romantic, just part of our DNA.  Most investors won’t have that.  The romantic part is owning your own beach, great view, stream/lake/river frontage, mountain or hilltop, etc.  Most of these countries you can just go out and buy it.  In the US you can’t just do it, plus it costs a lot.  And the simple things.  I’ll post a picture of my banana or my pineapple.  That’s cool living in Iowa.  I get enjoyment just thinking about it.  Our plantation manager sends pictures all the time, so we get to live it weekly.

3. Bragging rights- that is definitely true. Take BP as a population. Most people on the forum in terms of numbers will never invest in REI. The next group will never scale. The next group will scale and come to a point and ask why? When is enough, enough. The last group will never ask when is it enough, they live for the hunt.

At some point in that spectrum you will ask either I’m bored and want to be challenged (overseas investing) or why/ what is the purpose of my success once you get past the basics, which then is pure enjoyment.  

Financially it’s not worth owning a great property overseas if you’re only going to spend say 6 weeks a year.  There are two properties we stayed or looked at, that we could have rented for $5,000 per week.  I would rather pay $30,000 per year than own a property to stay there 6 weeks.  7% on a $1mm is $70,000.  Plus the headache and upkeep costs.  Plus you can go to other places.  You would need to do BNB or shares with families and friends to make it worth it.  And they will very rarely go there.  

So I will use us as an example for the thought process.  

Again don’t come to Belize or invest there.   No matter what I say. 

1.  Official language is English.  

2.  In Central time zone.  When we are in Italy I get calls at 2 am in the morning.

3.  BZD $2 pegged to USD $1.  No currency fluctuations. Plus they take US currency

4.  Laws.   Was a former British colony.  Their laws are based on the same common laws as the US.  Not Napoleonic law.  You’re innocent until proven guilty.  Sounds simple in the US, but not true most places overseas.

5. Citizenship-  takes a while but easy process to get citizenship or permanent residency.  You have to show $2,000 per month of cash float into the country.

6.  Property ownership.  You don’t need citizenship or residency to own property.

7.  Minimum wage is USD $2.50. Means unless you’re living the tourist life, your cost of living is cheap.  Also means very few locals can afford or outbid you on property.  Electric is $.21 per kWh vs $.07 in Iowa.  Gas is about $7 there.  Luckily we only use AC there.  Most of our electric cost is for heating in Iowa.  So our electric cost is lower.  Gas is higher but everything is closer, plus you don’t drive as much.  For $4 you can go anywhere in the country in a bus.  

8. Buyers market.  Locals can’t afford and there’s not a lot of idiots like me wanting to buy.  You have to make your money going in.  Your property might be on the market for 5 years if you want to sell.  We have bought 4 properties. 3 of the times we made a list in order of preference and started making offers.   With 3 day window.  If they wanted $300,000 we offered $200,000. If after 3 days they didn’t accept we moved on.  Actually we had subject to inspection.   Thus we had multiple offers out at once.  

We also don’t buy just for today.  All of our properties have a second value beyond Forestry.   Great location.  Great views.  Close to Ingrid electric or water. Streams or rivers.  These aspects will grow in value faster.

Most people I see on BP are looking for a great 3/2 for a great price.  But everyone is looking for that. In the Forestry extra value add approach above, I would be looking for a 2/1 that can be made into a 3/2.  Or a lot that can be subdivided and sold.

9.  But if it’s a buyers market and will always be, don’t I lose money at some point?  No.  We are doing Teak Plantations. Our market is China, India or Europe.  We won’t be making our money based on the local economy.  Plus we are picking properties with secondary value add features.

10.  It’s a second/third world country.  First caretaker stole our truck.  Second caretaker got drunk at 1 pm on a Tuesday and wrecked that same truck.  Third caretaker is locked in, I made it to good for him to screw up.  

11.  Flights. Belize is only 2 or 2.5 hours from a connection in Dallas or Houston.  Versus it takes us all day to get to Maui where my wife’s brother lives.  Plus different time zone.  But Belize flights are more expensive since it is a small market.  Plus you virtually have to fly back to the US to go to another Caribbean or Latin American country.

12.  Medical-  $20 to set a broken bone.  Prescription medicine can be purchased over the counter.  $10,000 hip replacement in next door Guatemala by US trained doctors.  Need a chiropractor or dentist at 7pm, just set up the visit.  Pay $50.  Need chemo or dialysis you have to go back to the US.

13.  Financing- There are tons of countries, locations and situations to choose from.  Most you will be the person with the deepest pockets.  Most will be cash only.  Or there are locations you can get financing with 3% interest today.  

14.  Building codes-  none to outrageous. 

Although the variations above sound great, it takes more homework for a regular investor to wind through all of these options.  Recommend you watch a YouTube for Belize compared to other countries by Will Mitchell.  He is a realtor and yes Belize comes out on top every time.  But watch his approach.

  And again, don’t come or buy in Belize.  

Start small and Make Your Big Mistakes Early.

 
We live on Iguana creek, so I bought this painting for $350.  This same type and quality of painting we would be happy to pay $2,000 to $5,000 in Maui or Italy.  Belize is a smaller market.  For both paintings, but also real estate.   It’s a buyers market both when you buy and later when you sell.